How Tuft & Needle found the right balance on Amazon
Not every digital brand is a guaranteed hit on Amazon.com, but mattress startup Tuft & Needle (which recently merged with Serta Simmons) hit its stride using the platform. In a session at IRCE, Tuft & Needle chief strategy officer and co-founder J.T. Marino discussed the steps the brand took to determine if selling on Amazon was the right path and what it has discovered about succeeding on the e-tail giant’s platform since.
Founded in 2012, Tuft & Needle decided to list itself on Amazon in 2013, driven by Mr. Marino’s observation that he trusted the reviews he read on Amazon more than he would those on a brand’s own website. He believed reviews were critical to generating interest in a just-introduced brand.
“You need to have credibility markers,” Mr. Marino said. “We need something to point to that gives customers confidence to take a chance on it.”
The brand waited until its net promoter score hit 65 before listing on Amazon so that it could be certain of the product’s quality before subjecting it to uncontrolled reviews.
In terms of sales cannibalization, the brand did see some sales move to Amazon. It also, however, saw customers introduced to its D2C channel via Amazon.
Through Amazon, Tuft & Needle verified the importance of having a footprint anywhere that a customer for the product might shop. The brand determined this by running a test whereby they forced all of their customers to check out through Amazon, even when shopping the Tuft & Needle website.
“What happened was a very large percentage of those people found a way to contact us to still buy direct,” Mr. Marino said. “There are people who maybe don’t care where they buy, and then there are people who really only want to buy from the stores where they want to buy from.”
Mr. Marino advised brands selling on Amazon or considering other marketplaces to:
- Measure conversion rate to determine if Amazon is increasing direct sales;
- Ask if they run the risk of becoming dependent on the marketplace;
- Evaluate the customer experience of each channel.
Mr. Marino touted the value of maintaining a brand-owned D2C channel/website as a “source of truth” or “router” for the brand to orient it with respect to other channels.
DISCUSSION QUESTIONS: What calculations do you think brands should undertake before deciding to sell on Amazon or other third-party marketplaces? Is Tuft & Needle’s Amazon experience an anomaly and, if so, why do you think it was able to leverage it so successfully when other brands might have difficulty or even suffer losses?